Office of Management and Budget Guidance on the Worker Adjustment and Retraining Notification (WARN) Act
Abstract
This letter responds to your request for GAOs opinion on questions arising from the memorandum issued by the Office of Management and Budget (OMB) on September 28, 2012, entitled Guidance on Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification (WARN) Act.1 You asked that we address four questions: (1) Is OMBs guidance mandatory or does it otherwise require a contracting officer to find WARN Act related costs that a federal contractor incurs in connection with a potential sequestration 2 allowable for reimbursement by the federal government under cost reimbursement type contracts? (2) Does a contracting officer have the discretion to determine if costs incurred for failure to comply with the WARN Act are reasonable? (3) Can an agency reimburse a contractor for any WARN Act related costs that exceed the contracts cost ceiling? (4) Does OMBs guidance prohibit reimbursement of WARN Act related costs incurred by a contractor in circumstances not addressed by OMBs guidance? As discussed below, we conclude that (1) OMBs guidance does not mandate that contracting officers treat WARN Act liability costs as allowable for reimbursement or otherwise alter a contracting officers responsibility to apply the cost allowability requirements under the Federal Acquisition Regulation (FAR)3 to a contractors request for reimbursement of costs; (2) a contracting officer has discretion to determine whether a contractors costs incurred for failure to comply with the WARN Act are reasonable; (3) OMBs guidance does not alter the operation of a contracts limitation of cost or funds clause, which provides a ceiling on the governments liability under a cost reimbursement contract; and (4) the guidance does not prohibit reimbursement of WARN Act related costs arising under circumstances not specified under the guidance. Consistent with our regular practice in preparing legal opinions,4 we obtained OMBs legal views on these issues.5
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 12, 2013
- Accession Number
- AD1177071
Entities
People
- Susan A. Poling
Organizations
- United States Government Accountability Office